Cautious Welcome for Islamic Banking
Under new rules approved late last month, banks in Kyrgyzstan can run their operations according to Islamic financial principles if they want to.
Cautious Welcome for Islamic Banking
Under new rules approved late last month, banks in Kyrgyzstan can run their operations according to Islamic financial principles if they want to.
Just one institution, EcoBank, is currently issuing loans according to Islamic principles, although the system is not fully up and running and it cannot meet all loan requests.
Reporter Eleonora Mambetshakirova found that few of the potential customers understand how the system works yet.
Imam Shakirmamatov, who sits on EcoBank’s council for Islamic law, warned that the system could be abused, for example the provision that if a business goes bankrupt, the owner does not have to repay his debt in full as the bank has a share in the risk
Some politicians and activists fear that allowing Islamic banking is the thin end of the wedge, signalling a slide away from the secular principles on which the state of Kyrgyzstan is based.
However, Kadyr Malikov, an expert on religious affairs, sees nothing wrong with it as long as it remains an alternative to mainstream banking. “There’s no need to politicise it,” he said. “It’s pure economics, a financing principle, that’s all. These are financial instruments.”
Reporter Eleonora Mambetshakirova found that few of the potential customers understand how the system works yet.
Imam Shakirmamatov, who sits on EcoBank’s council for Islamic law, warned that the system could be abused, for example the provision that if a business goes bankrupt, the owner does not have to repay his debt in full as the bank has a share in the risk
Some politicians and activists fear that allowing Islamic banking is the thin end of the wedge, signalling a slide away from the secular principles on which the state of Kyrgyzstan is based.
However, Kadyr Malikov, an expert on religious affairs, sees nothing wrong with it as long as it remains an alternative to mainstream banking. “There’s no need to politicise it,” he said. “It’s pure economics, a financing principle, that’s all. These are financial instruments.”
